All Forum Posts by: Nick Barlow

@David Carroll there was a podcast a few years back from a guy in California that bought 11 condos and 1031 them into apartments. He started by withdrawing Roth contributions only (which there is no penalty for, because you've already paid the taxes) and saw the impact that had, then "burned the ships", withdrew all of his IRA money and bought more, then 1031 and hit FI in like 2 years.

That was my inspiration for something similar-I cashed out IRA contributions for my first deal, then cashed out the rest of the IRA for my 4th (a 4 plex). Now, I'm reappraising that 4 plex, and it's very likely with the new valuation, I can commit the equity as the collateral and close on a triplex I have under contract with no money out of pocket. At a high level, my IRA couldn't reproduce that type of return. I'm estimating $30-$40k appreciation on the 4 plex.

I have raided my IRA and don't regret it. It was right for me. You could also consider a 401K Loan-I am unfamiliar if there are limitations with Solo 401Ks on this, but if you're really looking for downpayment money and want to "try it out" in RE, that is a middle of the road option I have used in the past that you could also consider.

@Steven May I would tell my 23 year old self to get into RE earlier. To answer your question, I put a little into a Roth and meet the company match for 401k, but I view that as a loan vehicle for my future RE purchases, once some of the “free money” match is vested. Ultimately I plan on a Roth conversion ladder the first few years once I hit FI.

In my 20s, I had a period where I maxed out Roth for my wife and I. That $$ turned into RE down payments. In the last two years, I have taken out ALL contributions from my Roth (which is tax free and not penalized) to put into 3 RE deals. I don’t regret it. Others I speak to are mortified by that. At the end of the day, I’d prefer to weather the impending recession (whenever the downturn comes) largely in RE over stocks.

The commenter that mentioned you haven’t seen a downturn at your age is spot on. It’s one thing to talk about “weathering the storm”, it’s another to not panic and sell when you’re life savings is worth 65% less in a 9 month span.

Keep us posted, and do what you feel the strongest about. There isn’t a wrong answer between the 2 if you’re living below your means and investing the difference

@Jeff Byrne after you get back from basic training you can get into a property you live in yourself for $0 down with a VA loan-every service member has access to one. My primary residence is funded by a VA loan that I didn't put a dime down for.

I’m kinda close to you: PM me if you’d like to talk specifics.

@Zeke Liston, as a Buckeye alumnus and RE investor I agree. I am trying to get into the Columbus market. Plenty of reasons to believe

@Ben Anderson there is a lot to be said on LLCs out here. My opinion is yes, but each state has different costs for LLCs, and consequences are different for each investor.

I feel an LLC does two things for you beyond the "corporate vail":

1) RE is a business. For me, starting an LLC made me think about rentals as a business

2) Using a lawyer close to (or in) your home town starts building a network of professionals you can call on when needed. When you want to call a lawyer, you want someone who will answer your phone call. You'll be a repeat customer the lawyer wants to retain (if you use one to start an LLC) rather than a cold call off the street...with a problem.

Good luck, and congrats on getting started!

@Wayne Brown option 1-leave it. My 2cents;If you’re going to take a 401K loan, use it to get INTO a property.

@Wa Chan need a little more info-if the IRA is a Roth you can take out your contributions with no penalty-since those are after tax dollars, it's no penalty, no fee, no tax consequences.

I took out Roth IRA contributions to buy a triplex and don't regret it. I've also loaned against my 401k for the down payment on different properties. Yes, you have to pay it back, to yourself. In my view, it's no different than paying back an investor.

For your first deal, It's worth considering. That being said, I wouldn't cash out EVERYTHING-just Roth IRA contributions or the 401k loan.

Good luck!

@Erin Connors- the richest man in Babylon. I wouldn’t call it a traditional “RE” book (one of the tenets is to own your own home), but it’s 90 pages long and a book I wish I would have read 10 years before I did.

Good luck to your daughter!

@Irwin Velez I agree with others who mentioned the 401(k) loan, and have done it twice myself. My rates were around 6% when I did it.

Regardless, when evaluating a deal, I just added an additional line for the the 401(k) loan in the numbers.

I was able to choose multiple loan durations (monthly from 12-60). So you can balance monthly costs too. Definitely check your plans options.

@Rob Malda I agree with you. EU is almost entirely negative interest rates across the board.

I understand “interest rate risk”

Is something to consider for long term as investors, but don’t personally expect to see anything much higher than current rates for next 10-15 years, at least.